DESCRIPTION (based on application?s abstract): The hospital industry in the United States is facing unparalleled financial pressures. Unlike the 1980s, hospitals do not have private payer surpluses to offset constrained payments from Medicare or Medicaid. Nor can they rely on steady growth in Medicare payments to offset reductions in private payer surpluses. As a result, some hospitals may be making tough choices about investments in hospital operations and processes that support high quality patient care, including providing sufficient staff with adequate training to meet patient needs, replacing antiquated equipment, investing in new technology, and providing adequate management and support structures. This study will examine the relationship between hospital financial condition and the quality of care delivered by U.S. hospitals through 5 specific research questions: Research Question 1: How does a hospital?s underlying financial position affect its decisions about resources and processes that are likely to affect the provision of high quality hospital care? Research Question 2: How do these decisions about resources and processes combine with patient characteristics and other factors to influence patient health care quality, including rates of mortality and complication from hospital care? Research Question 3: How do hospital decisions about resources and processes combine with market conditions and other factors to affect the annual financial performance of hospitals? Research Question 4: For hospitals that face limited competition, either due to geography or patient immobility, can more pronounced effects of financial pressures be observed on investments in quality-related resources and processes relative to hospitals in more competitive markets? Research Question 5: How does public policy that affects hospital payments, especially the 1997 Balanced Budget Act and its revisions, influence hospital decisions about quality-related resources and processes and the care their patients receive?